IOC may get Cairn crude

The petroleum ministry is expected to uphold the Indian Oil Corporation's claim for the purchase of crude oil from Cairn Energy's recent discovery in Rajasthan's RJ-ON-90/1 block. Hindustan Petroleum Corporation is also bidding for the crude.

IOC is learnt to have argued that since it has two running refineries -- Mathura and Panipat -- in the north and its crude pipelines are barely 150 km away from the discovery, it should be allowed to buy the crude.

It has also stressed that the Bhatinda refinery of HPCL is still under implementation and will take time to start production.

IOC has informed the ministry that the Cairn crude can be transported to Mathura or Panipat refineries by using its existing Salaya-Mathura or Mundra-Panipat crude oil pipelines, which are barely 150 km from the Cairn discovery.

On the other hand, HPCL is of the opinion that since the field lies quite close to the Bhatinda refinery, it will be cheaper to lay a pipeline from the find to the refinery instead of a pipeline from the Gujarat coast for imported crude.

Moreover, HPCL has argued that the oil will start flowing out of the well only in 2007 and by that time the refinery will start operating. Early this month, Cairn Energy had announced its second big oil discovery this year in Rajasthan. In January, it had found India's largest oil field in more than two decades.

The latest discovery was made in exploration block RJ-ON-90/1, where it drilled the N-A-1 well 8 km south of the Mangala oil discovery. The well is estimated to have in-place reserves of 100-460 million barrels and preliminary recoverable reserves of 20-70 million barrels. This discovery is expected to produce around 0.5 million tonnes of oil per day.

The discovery is about a third of N-B-1, now named Mangala, which is estimated to hold 450-1,100 million barrels of in-place reserves, of which 50-200 million barrels are estimated to be recoverable. The Mangala find can produce an estimated 2.5 million tonnes of crude oil annually from 2007.